If Money Talks, What Does It Say? Varieties of Capitalism and Business Financing of Parties

Abstract

Do business contributions to political parties convey different messages in different countries, and, if so, why? This article presents a pioneering cross-national study of firm behavior in political finance. It argues that motivations for contributions to parties are either ideological or pragmatic. The author infers motivation by quantitatively relating the payments of 960 firms to various political parties in Australia, Canada, and Germany over periods of between seven and seventeen years. In coordinated market economy Germany, a small number of firms made ideological payments; in liberal market economy Australia and Canada, large numbers of firms made pragmatic payments. Australia's left-right party system creates an awareness of policy risk, which motivated ideological payments, but in Canada's unusually nonideological party system no ideological bias in business financing of politics was found. The statistical analysis is supplemented by a qualitative investigation of discrete and reciprocal exchanges between businesses and political parties.